EMPLOYMENT AGREEMENT
AGREEMENT, dated as of October 1, 2001, between Vital Living, Inc.,
a Nevada corporation (the "Company"), and Xxxxxxx X. Xxxx (the "Executive").
The Company wishes to secure the services of the Executive, on and
subject to the terms and conditions set forth in this Agreement, and the
Executive is willing to provide such services on and subject to the terms and
conditions set forth in this Agreement.
The parties therefore agree as follows:
1. Term of Services. The Executive's "term of employment", as this phrase
is used throughout this Agreement, shall be for the period beginning on the
business day October 1, 2001 and ending on the third anniversary thereof,
subject, however, to earlier termination as expressly provided herein.
2. Employment. The Company shall, during the term of employment, employ the
Executive, and the Executive shall serve as, President. During the term
of employment, the Executive shall have such other functions, duties,
powers and responsibilities as the Company's Board of Directors may from
time to time delegate to the Executive. During the period of his
employment hereunder, Executive shall devote all of his business time,
interest attention, and effort to the faithful performance of his duties
hereunder The Executive agrees, subject to his election as such and
without additional compensation, to serve as a member of any committee of
the Board of Directors of the Company to which he may be elected or
appointed from time to time. During the term of employment, the Executive
shall devote his full time and best efforts during normal business hours
to the business and affairs of the Company. During the term hereof,
Executive shall not vary the terms of his employment with the Company,
without the specific written authorization from the Board of Directors.
Place of Employment. The Executive's principal place of employment shall
be 0000 Xxxxx Xxxxx Xx., Xxxxx, Xxxxxxx, and may change from time to
time, subject to such reasonable travel as the rendering of the services
hereunder may require.
3. Compensation; Other Agreements.
3.1Base Salary. The Company shall pay or cause to be paid to the
Executive, during the term of employment, a base salary of $150,000
per annum (the "Base Salary") paid $6,250 on the 15th and 30th of
each month, with the last installments prorated from the date of
commencement of employment.
3.2Signing Bonus. As an inducement for Executive to begin his
employment with the Company, the Company agrees to compensate
Executive with a $54,000 cash signing bonus, of which $27,000 has
previously been paid and the remaining $27,000 is to be paid within
one hundred and twenty (120) days of the date of this agreement.
3.3Reimbursement. The Company shall pay or reimburse the Executive for
all reasonable and necessary expenses incurred or paid by the
Executive in the performance of his services hereunder upon
presentation of expense statements or vouchers or such other
supporting information as the Company may customarily require of its
executives.
3.4Vacation Policy. The Executive shall be entitled to paid vacation in
accordance with the vacation policy of the Company; provided,
however, that the Executive shall be entitled to at least two weeks
paid vacation during each year of the term of employment.
3.5Restricted Stock Grant.
The Company has issued to Executive seven hundred fifty thousand
shares (750,000) of common stock, which are being held in escrow.
Delivery of the shares out of escrow to the Executive is contingent
upon certain events as follows:
(a) The Executive will immediately vest 320,000 of the shares concurrent
with the signing of this agreement;
(b) The Executive will continue to vest an additional 20,000 shares per
month, on the 15th of each month going forward for the next six consecutive
months;
(c) Within the term of this employment agreement, at the time the Company
achieves a minimum of $25,000 of Pre-tax income in any calendar month the
Executive will vest an additional 155,000 shares; and
(d) Within the term of this Agreement, at the time the Company achieves
gross revenue of $1,000,000 within any 12 month trailing period, the
Executive will vest the remaining 155,000 shares.
The certificates for the shares placed in escrow bears the following
restrictive legends conspicuously on their fronts or backs:
The transferability of the shares represented by this
certificate is restricted by an Employment Agreement dated
October 1, 2001, between the Company and the shareholder.
The Company has not registered the shares represented by this
certificate under the Securities Act of 1933, as amended, or
any applicable state securities laws. The shareholder may not
sell or transfer these shares unless they are registered
pursuant to these laws or unless exemptions from the
registration requirements of these laws are applicable to the
sale or transfer.
When any of the shares are released from escrow, the certificate(s)
representing the shares issued pursuant to this Agreement shall be
reissued without the restrictive legend concerning the restrictions
on transferability contained in this Agreement. If the required
financial levels are not met, then the portion of the shares
remaining in escrow because of such failure shall be delivered back
to the Company as soon as practically possible.
3.6 Stock Warrants. As an additional inducement for the Executive
to begin his employment with the Company, the Company agrees to issue
the Executive stock warrants, (the "Warrants") giving the Executive
the right to purchase two hundred fifty thousand shares (250,000) of
common stock $0.001 par value, of the Company (the "Warrant" shares).
The exercise price of the Warrant Shares shall be THIRTY-FIVE CENTS
($.35) per share.
The Warrants shall be exercisable at any time and from time to time, in
whole or in part; provided, however, that warrants may be exercised for
no longer than three (3) years from the date of this Agreement. The
warrants shall be exercised by written notice directed to the Company,
accompanied by a check payable to the Company for the Warrant shares
being purchased. The Company shall make immediate delivery of such
purchased shares, fully paid and non-assessable, registered in the name
of Executive. The certificates evidencing such shares shall bear the
following restrictive legend, unless and until such shares have been
registered in accordance with the Securities and Exchange Act of 1933, as
amended (the "Act"):
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, (THE "ACT"), OR
THE SECURITIES LAWS OF ANY OTHER JURISDICTION, AND MAY NOT BE SOLD,
TRANSFERRED, PLEDGED, HYPOTHECATED, OR OTHERWISE DISPOSED OF IN ANY
MANNER UNLESS THEY ARE REGISTERED UNDER SUCH ACT AND THE SECURITIES LAWS
OR ANY APPLICABLE JURISDICTIONS OR UNLESS PURSUANT TO ANY EXEMPTION
THEREFROM.
The Company shall use its best efforts to register the Warrant Shares
under the Act at the earlier of such time as it registers shares issuable
pursuant to a qualified employee stock option plan or such time as it
registers shares beneficially owned by or issued to executive officers or
directors of the Company, or after one year, at the written request of
the Executive.
If, and to the extent that the number of shares of common stock of the
Company shall be increased or reduced by an action other than for value,
including but not limited to change of par value, split,
reclassification, distribution or a dividend payable in stock, or the
like, the number of shares subject to the Warrant and the warrant price
per share shall be proportionately adjusted. If the Company is
reorganized or consolidated or merged with another corporation, Executive
shall be entitled to receive warrants covering shares of such
reorganized, consolidated, or merged company in the same proportion, at
an equivalent price, and subject to the same conditions. For purposes of
the preceding sentence, the excess of the aggregate fair market value of
the shares subject to the warrant immediately after any such
reorganization, consolidation, or merger over the aggregate warrant price
of such shares shall not be more than the excess of the aggregate fair
market value of all shares subject to the Warrant immediately before such
reorganization, consolidation, or merger over the aggregate warrant price
of such shares, and the new warrant or assumption of the old Warrant
shall not give Executive additional benefits which he did not have under
the old Warrant, or deprive him of benefits which he had under the old
Warrant.
Executive shall have no rights as a stockholder with respect to the
Warrant Shares until exercise of the Warrant and payment of the Warrant
Price as herein provided.
4. NON COMPETITION DURING TERM OF EMPLOYMENT. During the employment term,
Executive shall not, directly or indirectly, whether as a partner, employee,
creditor, shareholder, or otherwise, promote, participate, or engage in any
activity or other business directly competitive with the Company's business,
except with express permission of the Board. In addition, Executive, while
employed, shall not take any action without the Company's prior written
consent to establish, form, or become employed by a competing business on
termination of employment by the Company, Executive's failure to comply with
the provisions of the preceding sentence shall give the Company the right (in
addition to all other remedies the Company may have) to terminate any
benefits or compensation to which Executive may be otherwise entitled
following termination of this Agreement.
5. Termination by the Company. The Company may terminate this Agreement for
cause if any one or more of the following shall occur:
5.1The Executive shall die during the term of employment; provided,
however, that the Executive's beneficiaries shall be entitled to
receive his Base Salary through the last day of the month in which
his death occurs.
5.2The Executive shall become physically or mentally disabled so that he
is unable to perform his services for (I) a period of 30 consecutive
days, or (ii) for shorter periods aggregating 30 days during any
twelve-month period. The Executive shall become physically or
mentally disabled so that he is unable substantially to perform his
services for (i) a period of 30 consecutive days, or (ii) for shorter
periods aggregating 30 days during any twelve-month period.
Notwithstanding such disability the Company shall continue to pay the
Executive his Base Salary through the date of such termination.
5.3The Executive acts in a manner that provides Cause for termination.
For the purposes of this Agreement, the term "Cause" means (i) the
conviction of the Executive of any felony involving moral turpitude,
or (ii) any act of fraud, theft or embezzlement by the Executive
involving assets of the Company.
6. Termination by the Executive. The Executive may terminate this Agreement
on sixty days written notice to the Company.
7. Severance. If the Company terminates this Agreement without Cause, then:
the Company shall pay the Executive a lump sum cash payment (the
"Severance Payment") equal to six months Base Salary. If the Executive
terminates this employment agreement, the Company shall pay the Executive
through the last day of employment, plus any accrued vacation or sick
time.
8. Benefits. During the term of employment the Executive shall be eligible
to participate in any 401(K), pension, group insurance, hospitalization,
medical, dental, accident, disability or similar plan or program of the
Company now existing or established hereafter to the extent that he is
eligible under the general provisions hereof.
The Company will pay the entire monthly health premium for the executive,
which will include coverage for his immediate family (wife and children).
The Executive will be responsible for any co-pays or deductibles.
9. Notices. All notices, requests, consents and other communications
required or permitted to be given hereunder shall be in writing and shall
be deemed to have been duly given if delivered personally or sent by
reputable overnight courier, prepaid, or mailed first-class, postage
prepaid, by registered or certified mail, as follows (or to such other or
additional address as either party shall designated by notice in writing
to the other in accordance herewith):
(i) If to the Company:
Vital Living, Inc
0000 Xxxxx Xxxxx Xx.
Xxxxx, XX 00000
Attention: Xxxx Xxxxx
(ii) If to the Executive, to the address set forth on the records of the
Company.
10. Nonsolicitation. During the term of this Agreement and for a period of
three years after its termination Executive will not (a) directly or
indirectly recruit, solicit or otherwise influence any member of the Company,
or any distributor of the Company to discontinue any relationship with the
Company; (b) employ or seek to employ, or cause or permit any business which
competes directly or indirectly with the Company (the "Competitive Business")
to employ or seek to employ for any Competitive Business any person who is
then (or was at any time within six months prior to the date Executive or the
Competitive Business employs or seeks to employ such person) a distributor
for the Company; or (c) interfere with, or disrupt or attempt to disrupt any
past, present or prospective relationship, contractual or otherwise, between
the Company and any customer, employee, distributor or agent of the Company.
11.Non-Disclosure of Information. The Executive acknowledges that the
databases of the the Company (collectively, the "Proprietary
Information") are valuable, special and unique assets of the Company,
access to and knowledge of which are essential to the performance of the
Executive hereunder. In light of the highly competitive nature of the
industry in which the Company's business is, the Executive agrees that
all Proprietary Information, heretofore or in the future obtained by the
Executive as a result of the Executive's association with the Company,
shall be considered confidential.
In recognition of this fact, the Executive agrees that the Executive will
never use or disclose any of such Proprietary Information for the
Executive's own purposes or for the benefit of any person or other entity
or organization (except the Company) under any circumstances unless such
Proprietary Information has been publicly disclosed generally or, unless
upon written advice of legal counsel reasonably satisfactory to the
Company, the Executive is legally required to disclose such Proprietary
Information.
12.General.
12.1 Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of
Arizona applicable to agreements made and to be performed entirely in
Arizona.
12.2 Captions. The section headings contained herein are for
reference purposes only and shall not in any way affect the meaning
or interpretation of this Agreement.
12.3 Entire Agreement. This Agreement sets forth the entire
agreement and understanding of the parties relating to the subject
matter hereof and supersedes all prior agreements, arrangements and
understandings, written or oral, between the parties.
12.4 Representations. The Company represents and warrants to the
Executive that this Agreement is legal, valid and binding on the
Company, enforceable in accordance with its terms. No representation,
promise or inducement has been made by either party that is not
expressly stated in this Agreement, and neither party shall be bound
by or be liable for any alleged representation, promise or inducement
not so set forth.
12.5 Assignment. This Agreement and the Executive's rights and
obligations hereunder may not be assigned by the Executive. This
Agreement will be binding on any successors or assigns of the
Company.
12.6 Amendments; Waivers. This Agreement may be amended, modified,
superseded, canceled, renewed or extended and the terms or covenants
hereof may be waived only by written instrument executed by both of
the parties hereto, or in the case of a waiver, by the party waiving
compliance. The failure of either party at any time or times to
require performance of any provision hereof shall in no manner affect
such party's right at a later time to enforce the same. No waiver by
either party of the breach of any term or covenant contained in this
Agreement, whether by conduct or otherwise, in any one or more
instances, shall be deemed to be, or construed as, a further or
continuing waiver of any such breach, or a waiver of the breach of
any other terms or covenant contained in this Agreement.
12.7 Beneficiaries. Whenever this Agreement provides for any payment
to the Executive's estate, such payment may be made instead to such
beneficiary or beneficiaries as the Executive may designate in
writing filed with the Company. The Executive shall have the right
to revoke any such designation and to redesignate a beneficiary or
beneficiaries by written notice to the Company (and to any applicable
insurance company) to such effect.
12.8 Validity; No Mitigation. The invalidity or unenforceability of
any provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall
remain in full force and effect. In the event of the termination of
this Agreement by the Executive pursuant to Section 6, the Executive
shall not be required to seek other employment in order to mitigate
his damages hereunder, and, regardless of the period with respect to
which paid, no compensation or other payments from any other
employment, services or activity of the Executive shall be applied by
the Company in reduction of or be payable or paid by the Company
pursuant to this Agreement.
12.9 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all
of which together shall constitute one and the same instrument.
12.10 Resolution of Disputes. Any dispute or controversy arising with
respect to this Agreement may be referred by either party to
JAMS/ENDISPUTE for resolution in JAMS/ENDISPUTE. Any such
proceedings shall take place in Arizona before an arbitrator
appointed in accordance with the procedures of JAMS/ENDISPUTE. The
resolution of any such dispute or controversy by such arbitrator
shall be final and binding. Judgment upon the award rendered by such
arbitrator may be entered in any court having jurisdiction thereof,
and the parties consent to the jurisdiction of the Arizona state
courts for this purpose. The prevailing party shall be entitled to
recover the costs of arbitration (including reasonable attorneys'
fees and the fees of experts) from the losing party. If at the time
any dispute or controversy arises with respect to this Agreement,
JAMS/ ENDISPUTE is not in business or is no longer providing
arbitration services, then the American Arbitration Association shall
be substituted for JAMS/ENDISPUTE for the purposes of the foregoing
provisions of this section.
IN WITNESS WHEREOF, the parties have duly executed this Agreement
as of the date first above written.
Vital Living, Inc
By: /S/ Xxxxxxx X. Xxxxx
Name: Xxxxxxx X. Xxxxx
Title: C.E.O.
Agreed to and accepted as of
the date first above written
EXECUTIVE
/S/ Xxxxxxx X. Xxxx
Name: Xxxxxxx X. Xxxx
